ImpactAlpha, November 27 – The twist in the A$600,000 loan (US$407,000) from Impact Investment Group: the more social impact employment startup Xceptional delivers, the less it has to repay. The Sydney-based investment firm selected Xceptional as the first borrower under a structure it calls Beneficial Outcomes Linked Debt, or BOLD.
Xceptional, a “neurodiverse” jobs placement firm, works with candidates with autism to identify companies and roles suited to their skills, which include pattern recognition, sustained concentration and precision. (Watch this space: U.S.-based Ultranauts raised $3.5 million to prove neurodiversity can be a competitive advantage in business.)
“Other types of finance, like traditional venture funding, or a loan from a standard finance company, can drag a purpose-driven founder away from their mission,” notes IIG in its product brief.
How it works
BOLD starts with choosing a target impact metric. Xceptional is measuring the number of people placed in jobs, and who report being happy with their roles. That metric is assigned a baseline and a dollar value. As Xceptional grows, the tally of impact above the baseline gets deducted from the loan’s principal.
Xceptional also gets a grace period before it has to start repaying the loan, and it’s allowed to make revenue-based repayments to minimize financial pressure (see, “As unicorns stumble, investors warm to revenue-based financing for ‘zebras’ and ‘Clydesdales’”).
Xceptional’s five backers in the deal include IIG’s foundation, IIG Catalyst Fund, Tripple, Community Impact Fund, Disability Impact Fund and Snow Foundation.
U.S.-based Beneficial Returns has backed at least seven social enterprises with loans whose final payment is waived if an impact target is achieved. UBS Optimus Foundation’s “Social Success Note” is a similar concept. Germany’s Roots of Impact is testing impact “bonus” payments with its “SIINC” model (see, “Impact-linked financial rewards help high-impact companies attract growth capital”).